The unfortunate reality that comes with a Ponzi scheme case in bankruptcy is a mass of deceived unsecured creditors clamoring for their money back, and few, if any, present assets within the bankruptcy estate with which to pay them. The sheer size of most Ponzi schemes cases necessarily presents unique evidentiary, procedural and administrative challenges to professionals seeking to sort out the failed Ponzi enterprise. Ponzi scheme cases are riddled with litigation, which generally falls into four categories: (1) litigation against the Ponzi scheme operator(s), (2) litigation against parties who enabled the scheme to continue (such as professionals), (3) litigation to recover assets (such as legitimate accounts receivable or proceeds from the sale of property), and (4) avoidance actions against those who received property from the Ponzi scheme. This fourth category (and sometimes the third) may involve hundreds of defendants, who may be located throughout the country (or even the world).
This Article provides strategic suggestions and practical applications for Ponzi scheme litigation, including filing a procedures motion, seeking substantive or administrative consolidation, and utilizing and overcoming evidentiary hurdles.
Cite as 42 Golden Gate U. L. Rev. 641 (2012).
Sharon Z. Weiss and Natalie B. Daghbandan,
Overcoming Administrative, Procedural and Evidentiary Hurdles in Ponzi Scheme Litigation, 42 Golden Gate U. L. Rev.